Protecting People. Enhancing Lives. The RI GHT WAY Plan… The Next Phase. 1
This presentation contains statements that are, or may be, forward-looking regarding the group's financial position and results, business strategy, plans and objectives. Such statements involve risk and uncertainty because they relate to future events and circumstances and there are accordingly a number of factors which might cause actual results and performance to differ materially from those expressed or implied by such statements. Forward-looking statements speak only as of the date they are made and no representation or warranty, whether expressed or implied, is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Other than in accordance with the Company’s legal or regulatory obligations (including under the Listing Rules and the Disclosure and Transparency Rules), the Company does not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise. Information contained in this announcement relating to the Company or its share price, or the yield on its 2 2 shares, should not be relied upon as an indicator of future performance. Nothing in this presentation should be construed as a profit forecast . 2
Protecting People. Enhancing Lives. The RI GHT WAY Plan… The Next Phase. Andy Ransom Chief Executive Officer 3
H1 2017 Highlights Executing our strategy in 2017 16.0% Ongoing Revenue growth 16.0% in H1 2017 (H1 2016: 14.3%) at CER. Organic Revenue growth 4.2% vs 3.0% in H1 2016 (2.5% previously reported). Strong M&A delivering 11.8% of revenue growth. Pest Control 25.8% revenue growth of which 6.5% was organic growth. 4
H1 2017 Highlights Executing our strategy in 2017 13.0% Ongoing Operating Profit growth 13.0% in H1 2017 at CER. Good growth in North America, Germany, Asia and Pacific. Offset by lower profits in France, investments in digital capability and increased LTIP funding. Free Cash Flow from continuing operations £68.1m. 5
H1 2017 Highlights Executing our strategy in 2017 25 Acquisitions 19 in Pest Control including PCI JV in India. Annualised revenues of £175m. Haniel JV completed on 30 June. CWS-boco Italy (Hygiene) acquired. Agreement in place to dispose of 8 French laundries (mainly flat linen), expected to complete in H2. 6
High High-Quality Quality Business Business Focused on high-growth markets JV wi JV with th Han Haniel ma iel marks ks a ste a step c p cha hang nge e in in th the e e exec ecut ution ion of of ou our str r strate tegy Attractive price 40x+ FCF / 15x EBITA Redeploying the proceeds into Pest Control and Hygiene Grea Gr eater ter focu ocus s on g on growth wth mar markets ets Pest Control in particular – now 63% of group revenues c.70% of group profits. c.90% of group revenues are generated outside of the UK. Over 1,800 local service teams covering: 90% of global GDP and 90 of the 100 largest cities. High Higher er or orga ganic g nic growth th Ongoing businesses delivered 4.2% organic revenue growth in H1 2017. Q2 organic 4.7%. Fu Furthe ther opp r oppor ortun tuniti ities es for mar or margin gin up upli lift ft Density building opportunities (organic & M&A) and scale efficiencies; North America and Asia in particular. Lo Lower er ca capital pital inten intensi sity ty Annual Capex reduced by ~ £60m. Stron Str ong M g M&A &A pipe pipeli line ne Pest Control and Hygiene - focused on higher growth markets. 7
201 2017 Interim Interim Resu esults: lts: Fina Financ ncial ial Review view Jeremy Townsend Chief Financial Officer 8
Disposals – Impact on H1 Financials H1 2016 H1 2017 Accounting treatment £ million As Disposals Ongoing Pre- Disposals Ongoing • The results of the Rentokil Initial reported (Restated) disposals businesses contributed into the Haniel JV are classified as Ongoing Revenue* 1,023.1 (164.0) 859.1 1,162.9 (166.3) 996.6 Disposed Businesses and are therefore excluded from Ongoing Disposed businesses 8.0 164.0 172.0 2.0 166.3 168.3 Revenue and Ongoing Profit Total revenue 1031.1 - 1031.1 1,164.9 - 1,164.9 • The financial results of the French Flat Linen businesses that are proposed to be sold to RLD have also been excluded from Ongoing Ongoing Operating 121.0 (20.6) 100.4 133.6 (20.2) 113.4 Revenue and Ongoing Profit, Profit* recognising an expected Disposed businesses (0.4) 20.6 20.2 (0.3) 20.2 19.9 completion of the transaction in the second half of 2017 Total operating profit 120.6 - 120.6 133.3 - 133.3 *Ongoing Revenue and Ongoing Operating Profit exclude the results of disposed businesses, including the businesses contributed into the Haniel JV and the French laundries to be sold to RLD 9 Charts calculated on a 12-month trailing basis
Financial Highlights (Continuing Operations) H1 2017 £ million AER CER Δ AER Δ CER Ongoing Revenue * 1,056.0 996.6 28.4% 16.0% Ongoing Operating Profit * 122.1 113.4 29.2% 13.0% Adjusted PBTA 126.3 117.3 28.5% 12.5% PBT 592.9 582.9 637.4% 581.8% Free Cash Flow 68.1 Adjusted EPS 5.36p 4.97p 27.6% 10.9% Dividend 1.14p 15.2% *Ongoing Revenue and Ongoing Operating Profit exclude the results of disposed businesses, including the businesses contributed into the Haniel JV and the French laundries to be sold to RLD 10
Strong Financial Progress Building a track record of delivery Mid-single digit High-single digit Strong and sustainable delivery of Free Cash Revenue Growth Profit Growth Flow (AER) (CER) (CER) Ongoing Revenue* Growth Ongoing Operating Profit* Growth Free Cash Flow £m £m £m 2200 Revenue (£m) Organic Growth % 4.5% 270 170 4.0% 4 YR 4 YR 4 YR 150 CAGR CAGR CAGR 2000 250 10.4% 2.6% 13.3% 3.5% 130 1800 3.0% 230 110 2.5% 1600 210 90 2.0% 70 1400 1.5% 190 50 1.0% 1200 170 30 0.5% 1000 0.0% 10 150 Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Yr to Dec June Dec June Dec June Dec June Dec June Dec June Dec June Dec June Dec June Dec June Dec June Dec June 2013 2014 2014 2015 2015 2016 2016 2017 2013 2014 2014 2015 2015 2016 2016 2017 2013 2014 2014 2015 2015 2016 2016 2017 *Ongoing Revenue and Ongoing Operating Profit exclude the results of Disposed Businesses, including the businesses contributed into the Haniel JV and the French laundries to be sold to RLD 11 Charts calculated on a 12-month trailing basis
North America At const At stant exchange rates Strong Ongoing Revenue +29.7% Ongoing Group Ongoing Group Ongoing Operating Profit +29.5%, Revenue Operating Profit reflecting higher revenues and acquisitions, including synergy 39% 30% deliver y in Steritech • Organic Revenue Growth of +5.6% supported by strong growth in product sales, Pest Control organic growth +6.0% • Operating Margin maintained at 11.9%: – +1.6% points improvement in pest control service margins offset by higher mix of low-margin product sales H1 2017 H1 2017 Gr Growt wth • Five pest control acquisitions in H1 with combined annualised revenues of c. £61m Ongoing Revenue £386.7m +29.7% Strategic focus for H2 2017: Ongoing Operating Profit £45.8m +29.5% • Continued focus on driving Organic Growth initiatives • Ongoing integration of Steritech, Residex and other acquisitions Operating Margin 11.9% Maintained • Further margin improvement opportunities from M&A, scale efficiencies and density 12
Europe At const At stant exchange rates Ongoing Revenue +4.3% (+3.0% Organic Revenue growth) Ongoing Group Ongoing Group Ongoing Operating Profit +0.6% Revenue Operating Profit • Strong performances from Germany (+10.2%), Latin America 27% 31% (+38.8%) and Southern Europe (+5.8%) together with improved performance from France (+0.6%) • +3.5% growth in Hygiene, +10.6% growth in Pest Control • -0.7% points decline in Operating Margin, reflecting ongoing market challenges in our France Workwear business • Six acquisitions in H1 – two in Pest Control and four in Hygiene H1 H1 2017 2017 Growt Gr wth (including CWS- Boco’s Italian hygiene operations) with combined annualised revenues of c. £41m • Successful completion of JV with Haniel on 30 June 2017 Ongoing Revenue £264.0m +4.3% • Proposed divestment of eight laundries in France to RLD – completion Ongoing Operating Profit £48.2m +0.6% expected in Q4 2017 Strategic focus for H2: Operating Margin 18.2% -0.7% points • Continued focus on Quality initiative in remaining France Workwear businesses to mitigate competitive environment and pricing pressure Note: Ongoing Revenue and Operating Profit excludes numbers from those operations transferred to the Haniel JV and the French laundries to be sold to RLD 13
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